mercredi 18 septembre 2013

Why is Samsung throwing money at startups?

In a swank office
building, waiters handed out fried pickles and caviar-covered sushi.
Shiny new LCD screens covered several walls. It was opening night for
Samsung’s new startup accelerator in midtown Manhattan, and the company
had spared no expense. "The future for us is about the thoughtful
integration of hardware and software," said David Eun, the head of
Samsung’s Open Innovation Center. "And that means startups."

The smartphone market is
increasingly made up of vertically integrated companies that create both
the hardware and software for their devices. Apple was the pioneer of
this model in its modern form. Google got in the game when it purchased
Motorola. And Microsoft completed the trifecta when it acquired Nokia.
Samsung, which has risen to become the world’s biggest smartphone
manufacturer, wants to follow suit.

Meet hot companies. Incubate. Acquire.

"The
market has shifted from one where you make phones to one where you
control or piggyback off an ecosystem. Samsung controls the supply chain
to a greater degree than anyone else, but it has realized that it lags
the leaders in software, integration, and services," says Avi Greengart,
a research director at Current Analysis. "Its thought process is
simple: go where the innovation is happening, Silicon Valley and New
York, and cozy up to these folks to get a better look at what it takes
to build beautifully integrated apps."

Samsung recently announced a
new $1 billion venture fund that it will use to back early-stage
startups. But the purpose of the new accelerator space was clearly as
much about buying talent as making investments. "We’re looking to meet
the hottest companies, incubate, and acquire," said Eun. "It’s a
different model from our VC arm." Apps that hang at the accelerator, in
other words, may become "Sapps" in short order. Samsung has done this
before: it acquired the streaming media service mSpot and made it into a featured app that came preloaded on Samsung devices. At the accelerator launch party a number of employees from Boxee, which was recently acquired and folded into the smart TV division, mingled with the crowd.

"The refrigirator is really well stocked"

"The
accelerator space in New York features a series of well-appointed
offices and conference rooms where a young startup can ply its trade.
Samsung has opened a similar space in San Francisco. "I could definitely
get used to working here," said Nate Gosselin, a senior manager at the
mobile advertising startup Sharethrough. "The refrigerator is really
well stocked."

"As we look to the future, our
biggest opportunities to innovate are outside of hardware," said BK
Yoon, CEO of Samsung's Consumer Electronics Business, who was in New
York for the opening of the accelerator space. As for why young startups
would choose this venue over the half dozen other accelerators and
incubators in New York, Yoon said that "the companies who work here will
get access to Samsung’s roadmap, distribution, and marketing support."

"We are in the unique position
of being number one in both television and mobile," said Eun, gesturing
around the space to the panoply of LCD screens hung on the walls. "Our
goal is to have all these screens communicate with one another, so that
we can create the largest platform for distributing apps and,
potentially, advertising."

"Our biggest opportunities to innovate are outside of hardware."

This
ambitious plan is another catalyst for Samsung’s push into software.
"Samsung envisions an internet of things where your phone talks to your
tablet, which talks to your TV, which talks to your refrigerator," says
Ross Rubin, a principal analyst at Reticle Research. "In that scenario,
where customers are using devices that don’t have intuitive, native
interfaces, software becomes increasingly crucial."

There has been a steady stream of speculation that Samsung will be tempted to pull away from Google and fork Android,
much as Amazon has done, giving it the ability to sell devices
preloaded with its own services and store, and more importantly, without
Google’s. For the time being, the pair are still too closely tied, but
it’s clear Samsung is hedging for this eventuality by trying to bolster
its own software game. Whether acquiring startups is the smart way to
accomplish that, though, remains to be seen.